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The legal tussle between the SEC and Ripple takes a new twist as XRP enthusiasts characterize the commission’s remedy request as an abuse of power.
The crypto community has slammed the United States Securities and Exchange Commission (SEC) over its remedy request against blockchain payments company Ripple Labs.
SEC Seeks $1.95B in Fine Against Ripple
It bears mentioning that the SEC made its remedies request against Ripple on March 22. In particular, the commission requested a whopping $1.95 billion in fines and penalties following Ripple’s unregistered securities offering in the form of XRP institutional sales.
The $1.95 billion fine requested by the SEC surpassed the amount Ripple gained from the securities violation. Notably, the crypto company raised $728.9 million via its institutional sales of XRP from 2013 through 2020.
Law Professor Sheds Light on Disparity in SEC’s Request
The SEC’s request has elicited reactions among XRP community members, who believe the commission made the demand out of its hatred towards Ripple.
Prominent law professor J. W. Verret pointed out the massive disparity in the SEC’s remedies demand against Ripple in a post on X.
According to Verret, the regulatory agency typically requests about 11% recovery from violators of federal securities laws in other cases, including those involving Kik, Kraken, LBRY, and Telegram.
For instance, in its case against LBRY, the SEC collected $111,614 from the company due to the fact that it raised $11 million from the LBRY Credit (LBC) sales.
However, Verret noted that instead of the 11% recovery the SEC typically collects in similar cases, the regulatory agency is targeting a whopping 300% recovery from Ripple.
Abuse of Regulatory Power
Other XRP proponents also commented on the massive disparity in the SEC demand. Australian-based lawyer Bill Morgan weighed in on the matter, characterizing the SEC’s demand as an abuse of regulatory power.
In a recent X post, Attorney Morgan said the SEC “loathes” Ripple due to its relentless resistance in the lawsuit, which has halted the commission’s agenda of exerting control over the crypto industry for three-and-a-half years.
It is very abusive. The SEC must loathe Ripple for fighting so hard and hold up its plan to control crypto for 3.5 years. https://t.co/T8RqMdWZuC
— bill morgan (@Belisarius2020) April 3, 2024
The SEC has been making significant moves to elevate itself as the appropriate regulator for the crypto sector. This has led the commission to file several lawsuits against crypto entities such as Binance, Coinbase, Kraken, and Ripple.
However, its case against Ripple has not gone as expected and has lingered from December 2020 to date.
Ripple has won most aspects of the case, including the finding that XRP in itself is not a security. The court also sided with Ripple and held that the company’s programmatic sales and other distributions of XRP do not constitute investment contracts.
Furthermore, the SEC also dropped its charges against Ripple executives Brad Garlinghouse and Chris Larsen. Consequently, crypto enthusiasts like Morgan believe Ripple’s defense in the lawsuit has prevented the SEC’s quest to gain complete control over the industry.
Will the Court Side With the SEC?
Whether the court grants the SEC’s remedies demand of $1.95 billion against Ripple remains to be seen. Meanwhile, Ripple will file its opposition to the SEC’s opening brief later this month.
It is expected that Ripple would argue against the demand, providing facts and evidence to convince the judge to impose a lesser penalty.
The SEC will file the last brief in the remedies stage by May 6. After this, the court will then issue the final judgment at a later date.